FCC CHAIRMAN KENNARD AND COMMISSIONER GLORIA TRISTANI JOINED PRESIDENT CLINTON IN ANNOUNCING A PLAN TO PROVIDE LOCAL PHONE SERVICE FOR $1 A MONTH IN INDIAN COUNTRY
A Promise to Make Sure No Corner of America Is Left Behind

Washington, D.C. - William E. Kennard, chairman of the Federal Communications Commission (FCC), and Commissioner Gloria Tristani joined President Clinton today in announcing a plan to provide basic local phone service for as low as $1 a month for members of federally-recognized Indian tribes. FCC Chairman Kennard proposed a new investment of approximately $17 million in the existing annual $500 million Lifeline program which provides a discount on local phone bills for low-income customers.

Kennard noted, "This proposal would virtually eliminate affordability of monthly bills as a barrier to local service. It would create a market which telecommunications companies will be eager to serve, and result in an increase in modern infrastructure in Tribal areas."

Chairman Kennard said, "This investment in the Lifeline program will encourage phone carriers to expand services to Indian reservations. I am hopeful that over 300,000 Indian households will benefit from this new discount."

Kennard commented, "It is disgraceful that while we have a telephone system that is the envy of the world, basic telecommunications services are not widely enjoyed by our land's oldest people. Indians have among the lowest phone penetration rate of any demographic group in this country." Only 47% of Indians on reservations have phones, compared to 94% of households nationwide. The Navajo Reservation has one of the lowest telephone subscribership levels, with only 22% of households receiving service.

Kennard and Tristani accompanied President Clinton on his visit today to the Navajo Reservation and to the Navajo Reservation Community Boys and Girls Club where the President highlighted the Lifeline program announcement and other efforts to close the gap forever on the digital divide.

The Lifeline program, created in 1985, provides a discount on local telephone bills for low-income customers so that basic local phone service is more affordable. Among the basic services covered by the discount are voice grade access to the public switch network, emergency services, and operator services.

For many customers, local phone bills, before any discount, are about $20 a month. The current federal Lifeline program reduces eligible customers' local phone bills by as much as $7 per month. Many states provide additional discounts. Some states, like New York, bring basic local service to as low as $1 a month.

This Lifeline proposal is part of a larger FCC effort to ensure that Indians on reservations gain the same access to telephone services enjoyed by other Americans. To this end, the Commission continues to engage in a national results-oriented dialogue with Indian tribes to find ways to encourage phone and wireless carriers to expand services to underserved areas. The Commission has already held two field hearings, plans to offer a seminar for Tribal leaders this coming fall and has a proposed rule to promote universal service on tribal lands and other insular areas.

Like the successful E-rate program to wire schools and libraries to the Internet, the Lifeline program is paid for out of the FCC's Universal Service Fund, which is funded by an assessment on carriers' interstate and international end-user telecommunications revenues.
This Lifeline proposal would increase the Universal Service Fund by approximately
four-tenths of one percent (0.4%). Today, 5.6 million customers receive Lifeline service nationwide.

Kennard has devoted his chairmanship to working to narrow the digital divide by wiring schools and libraries to the Internet through the E-rate program; speeding deployment of advanced services to rural areas; and ensuring that people with disabilities have complete access to telecom services and equipment.

- FCC -

FACT SHEETINDIAN LIFELINE SERVICE

LIFELINE PROPOSAL: Increases the current discount for basic, local phone service for income-eligible members of federally-recognized Indian tribes.

1. Summary of Proposal

Eliminates lack of affordability as a barrier to local phone service, by making local phone service available to all members of Indian tribes for as low as $1 per month.

Encourages the build-out of telecommunications infrastructure. Companies will now have a predictable revenue stream to warrant facilities construction in areas previously regarded as high risk and unprofitable.

Attracts new entrants and new technologies to provide service to these communities.

Will result in a minimal increase to the Universal Service Fund (approximately 0.4%).

2. Lifeline Program Background

In 1985, the Lifeline Program was created to provide discounts on basic telephone service of up to $7.00 to all income eligible telephone customers.

Today, 5.6 million Americans receive Lifeline service.

The Lifeline program, a part of the Universal Service Fund, is included in the universal service assessment on carriers' interstate and international end-user telecommunications revenues. The Lifeline component of the Universal Service Fund amounts to about $500 million a year.

3. Tribal Phone Penetration

In spite of the existing Lifeline discount, telephone subscribership among members of federally-recognized Indian tribes remains low.

Only 22% of Navajo Reservation households have a phone, according to the 1990 census.

Nationwide, penetration rate for Indians on reservations is 47%.

Penetration rate for United States is 94%.

Low incomes make it difficult for Indians to have a phone even where facilities are available.

Average annual income on the Navajo Reservation is $6,352.

Average per capita annual income of Indians on reservations or trust lands is $4,478.